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Foreign Sovereign Immunities Act. Separation of Powers. Supreme Court holds that an act of Congress specifically directed at ongoing litigation does not violate the separation of powers doctrine.

In this case, Bank Markazi, the Central Bank of Iran, challenged the attempts of respondents to execute judgments obtained against Iran under the terrorism exception to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq. The issue before the Supreme Court was whether the Iran Threat Reduction and Syria Human Rights Act of 2012, 22 U.S.C. § 8772, violated the separation of powers by compelling the courts to reach a predetermined result in this particular case.

The majority of the court held that § 8772 does not offend separation of powers principles protecting the role of the independent Judiciary within the constitutional design, because the statute is merely designed to aid in the enforcement of federal-court judgments. In a dissenting opinion, Chief Justice Roberts, joined by Justice Sotomayor, argued that § 8772 violated the separation of powers to such a degree that Congress essentially passed a law saying, "respondents win."

Respondents are victims of Iran-sponsored acts of terrorism, their estate representatives, and surviving family members, together amounting to over 1,000 respondents. Respondents are part of 16 groups that filed separate actions against Iran pursuant to the FSIA's terrorism exception (28 U.S.C. § 1605A), in the U.S. District Court for the District of Columbia. They obtained evidence-based default judgments against Iran, worth billions of dollars.

Respondents then sought enforcement in the U.S. District Court for the Southern District of New York ("SDNY"), because of the location of about $1.75 billion in bond assets belonging to Bank Markazi. After separate filings of writs of execution by the respondents, the SDNY consolidated the enforcement actions under the Peterson case docket number. It is as to this consolidated proceeding that Congress directed § 8772.

As described by the court, § 8772 was "[e]nacted as a freestanding measure, not as an amendment to the FSIA or the [Terrorism Risk Insurance Act]." Section 8772(a)(1) of the statute provides that:

a financial asset . . . shall be subject to execution or attachment in aid of execution in order to satisfy any judgment . . . awarded against Iran for damages for personal injury or death caused by an act of torture, extrajudicial killing, aircraft sabotage, or hostage-taking, or the provision of material support or resources for such an act.

Section 8772(b) then defines a "financial asset" to include the assets specifically identified in the Peterson consolidated action. Section 8772 does not, however, direct the courts to award Bank Markazi's assets to Respondents. The statute, rather, provides that the financial assets identified by the Peterson consolidated action "shall be subject to execution in order to satisfy any judgment" against Iran.

The court split as to this distinction. The majority held that § 8772 "provides a new standard clarifying that, if Iran owns certain assets, the victims of Iran-sponsored terrorist attacks will be permitted to execute against those assets." It agreed with the district court that § 8772 left "plenty to adjudicate," and did not impinge on judicial power. The dissenters, however, argued that, "Section 8772 decides this case no less certainly than if Congress had directed entry of judgment for respondents."

The court also decided that § 8772 is within the congressional authority over foreign affairs. Though the FSIA shifted from the Executive to the courts the responsibility to determine a foreign state's amenability to suit, the court found that "it remains Congress' prerogative to alter a foreign state's immunity and to render the alteration dispositive of judicial proceedings in progress." The court held, therefore, that the statute does not offend the separation of powers principles contained in Articles I, II and III of the Constitution.

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